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1301.0 - Year Book Australia, 2006  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 20/01/2006   
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Contents >> Chapter 14 - Agriculture >> Financial statistics of farm businesses

FINANCIAL STATISTICS OF FARM BUSINESSES

Estimates of selected financial aggregates of farm businesses in this section are based on data collected in the annual Australian Agricultural and Grazing Industries Survey conducted by the Australian Bureau of Agricultural and Resource Economics. This collection covers farm businesses engaged in the 'broadacre' industries of grain growing, sheep and beef farming, and beef cattle feedlot operations (Australian and New Zealand Standard Industrial Classification (Group 012)).

14.7 BROADACRE FARM BUSINESSES, Selected financial performance measures

Annual average per farm
Units
1999-2000
2000-01
2001-02
2002-03
2003-04

Total cash receipts
$000
221.0
254.5
314.3
257.6
280.7
less Total cash costs
$000
169.6
182.7
213.5
205.8
213.7
Farm cash income
$000
51.3
71.9
100.8
51.8
67.0
plus Build-up in trading stocks
$000
-1.2
-1.7
6.4
-11.9
9.5
less Depreciation
$000
21.2
22.3
25.1
26.2
26.7
less Operator and family labour
$000
36.4
38.4
39.7
41.1
42.9
Farm business profit
$000
-7.5
9.4
42.4
-27.4
7.0
Profit at full equity(a)
$000
8.8
27.9
63.0
-6.6
31.9
plus Capital appreciation
$000
22.7
90.6
77.6
150.4
202.9
Profit at full equity (incl. capital appreciation)
$000
31.4
118.5
140.6
143.8
234.9
Farm capital at 1 July
$000
1,317.4
1,432.3
1,699.6
1,917.7
2,123.6
Rate of return (excl. capital appreciation)(b)
%
0.7
1.9
3.7
-0.3
1.5
Rate of return (incl. capital appreciation)(b)
%
2.4
8.3
8.3
7.5
11.1
Off-farm income(c)
$000
21.1
23.6
25.3
29.0
27.0

(a) Farm business profit, plus rent, interest and finance lease payments less depreciation on leased items.
(b) Computed by expressing profit at full equity as a percentage of total opening capital.
(c) Collected for owner manager and spouse only. Includes income from wages, other businesses, investment and social welfare payments. Average for those responding farms for which details of off-farm income are available for both owner manager and spouse.

Source: Australian Bureau of Agricultural and Resource Economics.

FINANCIAL PERFORMANCE

Selected financial performance measures - expressed as annual averages per farm - for all broadacre farm businesses for the years 1999-2000 to 2003-04 are shown in table 14.7 and for the years 1997-98 to 2003-04 in graphs 14.8, 14.9 and 14.10.

In 2002-03 Australia experienced a severe and widespread drought. As a result, the production of most crops was substantially reduced. Drought also affected pasture and water availability resulting in higher than usual turn-off of unfinished livestock. The need for increased supplementary feeding of livestock, coupled with higher grain prices, resulted in an increase in cash costs for livestock farms. Following a large increase in receipts in the previous year, average total cash receipts for broadacre farms are estimated to have decreased by 18% in 2002-03. Average total cash costs for broadacre farms decreased by around 4% in 2002-03. Improved climate conditions over much of Australia in 2003-04 resulted in an increase in farm financial performance measures.

Graph 14.8: BROADACRE FARM BUSINESSES, Farm cash income


Farm cash income is a measure of the cash funds available for farm investment and consumption after paying all costs incurred in production, including interest payments, but excluding capital payments and payments to family workers. It is a short-term measure of farm income because it takes no account of depreciation on assets. Average cash income for the broadacre farms as a group increased 29% in 2003-04 to $67,000, still a long way short of the high cash income year of 2001-02 with $100,800 (graph 14.8).

Average farm business profit increased in 2003-04 to $7,000 from a negative $27,400 the previous year (graph 14.9). Farm business profit is a longer-term measure of the profitability of farms because it takes account of depreciation and inventory changes.

Graph 14.0: BROADACRE FARM BUSINESSES, Farm business profit


For the broadacre industries as a group, rate of return averaged 1.5% in 2003-04 (graph 14.10), up from the negative 0.3% in 2002-03.

Graph 14.10: BROADACRE FARM BUSINESSES, Rate of return (excluding capital appreciation)(a)


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